| Exchange Solutions Group is a Bonded and Insured Qualified Intermediary under Section 1031 of the Internal Revenue Code. Exchange Solutions Group offers our clients several different Exchange Types in conjunction with several different Exchange Accounts. There are some important features of all of our accounts at Exchange Solutions Group. All of our Exchange Accounts are segregated, reconciled, and issued their own independent 1099 for tax reporting purposes. Asset protection and transparency are fundamental aspects of all our client relationships. Equally as important, all client proceeds are held in Liquid, FDIC-insured bank accounts.
Segregated
A segregated account is an account established in the name of the qualified intermediary for the benefit of the client. The only funds flowing in and out of a segregated account are those of the client.
A segregated account isolates the client's funds from the other accounts held by the Qualified Intermediary, establishing that the accounts are earmarked for the client’s 1031 exchange. For asset protection reasons this minor detail proved to be a major defining feature for bankruptcy recovery in a landmark federal bankruptcy case involving a title company.
This type of Separately Identified Account adheres with the Virginia Exchange Facilitators Act (HB417), and should be contrasted with the commingling of many attorney and title escrow accounts.
Interest Reporting
All segregated accounts are issued their own individual 1099 when they accumulate interest. Exchange Solutions Group offers our clients current reporting on interest and growth factor in anticipation of replacement property closing. This allows exchangors to adequatelyapply for the appropriate amount of debt on replacement properties and to adjust their year-end taxes to account for taxable interest received on exchange proceeds.
FDIC-Insured Bank
All proceeds are held in FDIC-insured bank accounts.
Liquid Account
All proceeds utilize Demand Deposit Accounts or Liquid Money Market Accounts. We do not utilize securities or auction rate securities as we view those investments as unsuitable for our exchange clients.
Interest-Accruing
Creating an interest bearing exchange accounts is the standard business practice at Exchange Solutions Group. Many CPA’s and tax attorneys suggest to their clients that they are not entitled to interest (also called “growth factor”) on their exchange proceeds. However, we encourage clients to avail themselves of interest; however, we offer a discounted non-interest accruing account for clients with shorter exchange periods that will not be in escrow for a long duration. Because interest rates fluctuate regularly we encourage you to contact us to discuss a current rate. Since our average account is open 90 days we make a commitment that no account will earn less than the 90 day treasury bill. Moreover, Exchange Solutions Group Accounts that provide interest payments on all of the exchange funds, from the date the proceeds are transferred to Exchange Solutions Group.
Additional Safe Harbor Solutions
Exchange Solutions Group makes available to our clients additional Safe Harbor protection options such as Qualified Escrow agreements and Qualified Trust relationships. While our role is acting as a Qualified Intermediary, we have engaged third-party banks to act as trustees and escrow agents for clients wishing compliance with multiple safe harbors.
Exchange Types
- Starker or Delayed Exchange- Real Estate
- Starker or Delayed Exchange- Aircraft
- Starker or Delayed Exchange- Personal Property/Equipment
- Reverse Exchanges- Real Estate
- Reverse Exchange- Aircraft
- Reverse Exchange-Personal Property/Equipment
- Build to Suit
- Advanced Build to Suit
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